Posts Tagged Renewable heat incentive

The World’s first Renewable Heat Incentive was launched in UK by the energy secretary Chris Huhne. It is a government scheme with an investment of 860 million pounds aimed at increasing the green capital investment by 4.5 billion pounds by 2020 to create a new market for renewable heat.

What is Renewable Heat Incentive?

RHI is a government designed to encourage people to adopt low-carbon heating systems and thereby reducing the dependence of fossil fuels for heating purpose. It is the first of its kind financial scheme in the world to subsidize low-carbon heating. It provides an incentive to induce number of industrial, commercial and public sector installations adopt renewable energy.

Need for such scheme

Currently around half of the UK’s carbon emissions come from the energy used to produce heat – more than from generating electricity. The RHI will reduce emissions by 44 million tonnes of carbon to 2020, equivalent to the annual carbon emitted by 20 typical new gas power stations. About 95% of heat in the UK is currently produced by burning fossil fuel but with North Sea supplies in decline, leading to an increase in imports, low carbon alternatives are needed.

The new financial incentive will encourage installation of equipment like renewable heat pumps, biomass boilers and solar thermal panels to reduce emissions and support the existing 150,000 jobs in the heating industry. Renewable heat is a largely untapped resource and an important new green industry of the future according to Chris Huhne.

Businesses and public sector organisations are expected to be the biggest beneficiaries of the plan at first, as households will have to wait until October 2012. But up to 25,000 homeowners will be eligible from this July for a special grant to cover the cost of installing green heating. People taking up the subsidies will receive a rate of return on their outlay of about 12%, according to government calculations. For instance, a large ground source heat pump installation costing about £300,000 would receive a subsidy payment of £27,600 a year.